Fair market value (fmv) of private limited company

Chandresh Sanat Jatania (Chartered Accountants) (116 Points)

02 April 2018  

Hi,

 

My client had purchased 100 shares in a private limited company in 1975 @ Rs. 10 per share. He wants to sell these shares to a third party @ Rs. 1,000 per share.

Can I take the FMV of the shares as 1 April 2001 and calculate the capital gain. 

How do i calculate the FMV of the shares as on 1 Apil 2001

I have prepared a small table. Request you to let me know which of the scenarios is correct. Please feel free to indicate any mistakes / error in the same.

Thanks and regards,

CA Chandresh Sanat Jatania

 

  a b c d=(c*b)/a e  f=e-d 
Scenario CIF of base year CIF year of sale  (assumed) Purchase price Indexed Cost of acquisition Sale price  Long term capital gain 
Base year is 1981 100                              1,165                    1,000                       11,650          100,000                      88,350
Base year is 2001 100                                 280                    1,000                         2,800          100,000                      97,200